During the first three months of 2009, the Columbia, South Carolina, office market remained relatively stable amidst the continued economic downturn in the US economy. Although it is reported that the United States has been in a recession for the past twelve months, the Columbia office market only started showing signs of decreased growth in the first quarter of 2009. It has long been known that Columbia is fairly insulated from national recessions due to the stability of Fort Jackson, the University of South Carolina, state government and other economic drivers. Yet in the current recession, many weaknesses can be felt even in the areas which normally stabilize the market.
Local employment and housing markets showed signs of improvement in the first quarter, which could be an indicator of the early stages of a recovery and a shortening of the recessionary cycle in Columbia. Total employment for the Columbia MSA increased by 900 jobs (0.25%) from January 2009 to February 2009, while home sales for the Columbia region increased 29.5% during this same one-month period. Both statistics were welcome news for those in the real estate market in Columbia.
Office occupancy levels remained stable during the first three months of the year, hovering at 85.0% occupancy for the total market, but the availability of sublease space increased substantially in the Central Business District (CBD). As of March 31, 2009 approximately 2.0% of the CBD market was available for sublease. Although these lease commitments are not expected to expire for several years, the sublease space does offer competitive space in the market.
Certain sectors of the economy have also shown signs of downturn and therefore could have future impact on the office market. Law firms demonstrated signs of decline due to economic pressures during the first quarter of 2009, and while staff reductions were not common, many law firms were looking for ways to save on operating costs. Accordingly, reductions in office space may occur as law firms downsize through relocation or lease renewal. Additionally, the State of South Carolina continued to undergo significant budget cuts during the first quarter of 2009, which will likely result in decreased space needs as various agencies downsize. Without a swift economic turnaround, these trends will result in decreased occupancy in the remainder of 2009.
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